Americas, African refiners maintain focus on upgrading, integrating, consolidating assets

Dec. 4, 2017
The latest OGJ annual worldwide refining survey showed a readjustment in global crude oil refining capacity for the coming year.

The latest OGJ annual worldwide refining survey showed a readjustment in global crude oil refining capacity for the coming year.

Year-on-year changes, however, continued to result largely from OGJ's broadened data collection efforts to include capacity data an individual operator has disclosed publicly but did not voluntarily report to OGJ by the survey deadline.

While this year's survey does include data captured via OGJ's more expansive collection methods, these independent data-gathering procedures are evolving on a continual basis, particularly for regions such as Asia-Pacific, Eastern Europe, the Middle East, and Africa, where capacity information on refinery processes downstream of crude distillation units remains difficult to obtain.

OGJ continues to evaluate additional approaches to enhanced, independent data discovery methods as part of an ongoing program to provide readers the latest operational data available on global refineries whether or not reported by survey respondents.


Global refiners continued to announce capacity expansion projects during 2017, but heightened environmental regulatory regimes amid a sustained lower crude oil price environment prompted many operators to remain focused on improving efficiency, maximizing processing capabilities, and expanding integration of existing operations.

While several previously and newly announced greenfield refining projects continued to advance by yearend, the bulk of planned expansions involve units downstream of primary crude processing, many of which are to involve upgrades aimed at optimizing performance and output of current units in lieu of adding fresh capacities.

Increasing industry consensus of a "lower forever" outlook regarding crude prices, however, continued to encourage consolidation, restructuring, and divestment efforts globally by integrated and independent refiners alike.

North America

During 2017, North American refiners continued to focus on programs to optimize, integrate, and consolidate current operations to maintain their global competitiveness.

In April, Marathon Petroleum Corp. let a contract to Fluor Corp. to provide engineering and procurement (EP) for a major reconfiguration project involving works at both the 459,000-b/d Galveston Bay and 86,000-b/d Texas City refineries in Texas City, Tex. (OGJ Online, Apr. 13, 2017). Designed to improve operational efficiency, the reconfiguration project will enable the two refineries to achieve the US Environmental Protection Agency's updated Tier 3 gasoline sulfur standards.

Fluor's scope of work under the contract includes delivery of EP for an unidentified new unit, modernization of several existing units, as well as modifications to the utilities and off sites to support scheduled process changes and refinery connections.

The contract followed Marathon's previously announced South Texas Asset Repositioning (STAR) program, which aims to enhance profitability and reliability by unifying the Galveston Bay and Texas City refineries to form a fully integrated 585,000-b/d Texas refining complex (OGJ Online, Jan. 23, 2017). First announced in fourth-quarter 2015, the $1.5-billion STAR program includes a series of staged project investments at the Texas refineries that, alongside expanding crude processing capacity and production of ultralow-sulfur diesel, also will enable increased upgrading of residual oil into high-quality products as well as higher recovery of distillates and gas oil. Integration of the refineries into a single complex additionally will allow Marathon to reduce overall production costs of its Texas refining operations.

Marathon completed a first phase of the multiyear STAR program in 2016 at the Galveston Bay refinery with a project that increased conversion of residual oil into lighter products by 20,000 b/d. Scheduled to be fully completed in 2021, the STAR program will in result in an integrated Galveston Bay-Texas City refining complex (the Galveston Bay refinery) equipped with the following capacities: crude distillation, 585,000 b/d; resid processing, 142,100 b/d; catalytic cracking-hydrocracking, 258,400 b/d; alkyation, 52,800 b/d; and aromatics, 33,800 b/d.

Elsewhere in its system, Marathon let a long-term contract to Praxair Inc. to supply hydrogen to support an ultralow-sulfur diesel (ULSD) project at its 539,000-b/d refinery at Garyville, La. (OGJ Online, Jan. 23, 2017). Praxair will deliver hydrogen through its existing pipeline network in southeast Louisiana for the refinery's ULSD project, which is planned for 2018, the industrial gas supplier said.

Scheduled to be completed by yearend 2018, Marathon's proposed $120-million Garyville ULSD project—which joins a series of other initiatives related to Marathon's ongoing planned investment of about $475 million to enhance margins across its entire refining system—intends to increase the refinery's production of ULSD by 10,000 b/d.

In addition to the ULSD project, Marathon also has outlined a $220-million budget for upgrading works at the Garyville refinery's fluid catalytic cracker (FCC) to boost the manufacturing site's output of alkylate and light products, the company said. Started in third-quarter 2016, the Garyville FCC-alkylation revamp was targeted for completion by yearend. A similar $40-million FCC-alkylation project also is slated at Marathon's 132,000-b/d refinery in Detroit, Mich., while another $95-million investment was earmarked for projects designed to expand ULSD export capacity at the 459,000-b/d Galveston Bay, Tex., refinery (30,000 b/d ULSD by late 2016; 115,000 b/d of gasoline, ULSD in 2019).

In August, Tesoro Corp. officially became Andeavor (OGJ Online, Aug. 1, 2017). The name change followed the former Tesoro's acquisition of Western Refining Inc. completed on June 1, at which time Andeavor took ownership of Western's three refineries, including the 131,000-b/sd (124,450-b/cd) El Paso, Tex., refinery; the 25,000 b/sd (23,750 b/cd) refinery near Gallup, NM; and the 98,000-b/sd (93,100-b/cd) St. Paul Park refinery (OGJ Online, June 1, 2017; Mar. 24, 2017).

Alongside ownership of the refineries, Andeavor's purchase gained the independent refiner access to price-advantaged crude feedstock in the Permian, San Juan, and Bakken basins, the Western Canadian Sedimentary Basin, as well as access to a fully integrated crude pipeline system that serves western refineries and third parties, including a 17% interest in the 465,000-b/d Minnesota pipeline, the primary supply route for western Canadian and North Dakota crude to the St. Paul Park refinery.

The finalized transaction followed earlier consolidation moves by both independent refiners, including Tesoro's acquisition of Dakota Prairie Refining LLC, the former MDU Resources-Calumet Specialty Products Partners LP joint venture that operated a 20,000-b/d diesel refinery near Dickinson, ND, and Western's takeover of Northern Tier Energy LP's high-conversion refinery at St. Paul Park, Minn. (OGJ Online, June 28, 2016; June 24, 2016).

ExxonMobil Corp. returned its 365,000-b/d Beaumont, Tex., refinery to operation within weeks after Hurricane Harvey's intense rains flooded a number of critical pumps and pipeline facilities in and around the US Gulf Coast refining complex. Photo from ExxonMobil.

With the Western acquisition completed, Andeavor now owns 10 refineries with a combined refining capacity of more than 1.1 million b/sd (1.05 million b/cd).

Andeavor also advanced its proposed $460-million program to physically connect and further integrate its existing, adjacent Carson and Wilmington refineries into a combined Los Angeles manufacturing site. Designed to improve air quality, substantially reduce local emissions, and upgrade refinery equipment, the Los Angeles Refinery Integration & Compliance project, or LARIC, once completed, will increase the integrated refinery's crude oil and feedstock processing capability only slightly (6,000 b/d, or 2%), according to Andeavor. After receiving requisite permits from California's South Coast Air Quality Management District (SCAQMD) in June, Andeavor said it began project construction in September 2017 and expects to complete most construction activities by the end of 2018. Construction associated with six new crude oil storage tanks are scheduled to continue inside the refinery's boundaries until 2022.

Andeavor is moving forward with its proposed $460-million program to physically connect and further integrate its existing, adjacent Carson and Wilmington refineries into a 380,000-b/d combined Los Angeles manufacturing site, which will increase the integrated refinery's crude oil and feedstock processing capability by 6,000 b/d, or 2%. Photo from Andeavor.

SCAQMD's June 23 approval of 18 permits for the integration project covered work to enable the refinery to comply with the EPA Tier 3 gasoline standards (which took effect Jan. 1, 2017), install new heat exchangers to increase efficiency and reduce air pollution, and install interconnecting pipelines between the Wilmington and Carson sites, the California agency said.

In July, Andeavor also received the permit for the isomerization portion of its Anacortes Clean Products Upgrade Project (CPUP) at its Anacortes refinery and has started construction, the company said on Nov. 8. Scheduled to be completed and operational in second-quarter 2018, the $170-million isomerization project comes as part of CPUP additions and upgrades to the existing refinery that would allow it to produce 15,000-b/d of mixed xylenes and supply cleaner local transportation fuels (OGJ Online, Feb. 20, 2015). Alongside adding an isomerization unit to increase the amount of octane available to the refinery, CPUP would involve:

• Expanding the refinery's naphtha hydrotreater to remove more sulfur compounds from gasoline.

• Constructing an aromatics recovery unit to produce mixed xylenes.

• Installing a steam boiler to provide additional energy to operate the units.

• Building a marine-vapor emissions control system to capture vapors from marine vessels that come to the dock.

On Aug. 8, Andeavor said it also had received a permit from Washington's Northwest Clean Air Agency for CPUP's mixed-xylenes project, which allows the company to move forward in obtaining remaining permits for the project.

In February, Chevron Corp. let a contract to Worley-
Parsons Ltd. to provide engineering, procurement, and construction management (EPCM) services for conversion of the existing 4,500-b/d hydrofluoric acid (HF) alkylation unit at its 53,000-b/d refinery in Salt Lake City, Utah, into the first-ever alkylation unit in the US based on ionic liquids alkylation technology (OGJ Online, Feb. 8, 2017; Oct. 4, 2016). As part of the $67-million EPCM contract, WorleyParsons will execute a retrofit of the unit, replacing the HF process with ISOALKY, a proprietary alkylation technology developed by Chevron USA Inc. and licensed by Honeywell International Inc.'s UOP LLC, that uses ionic liquids instead of HF or sulfuric acids as a liquid alkylation catalyst for production of high-octane fuels, the service provider said.

In addition to increasing C3-C5 olefin feed flexibility and lower handling risks vs. HF and sulfuric acid, ISOALKY technology will enable catalyst regeneration to occur within the unit itself, lowering catalyst consumption by 400 times vs. sulfuric acid. The replacement technology also will reduce environmental impacts and safety risks associated with the HF alkylation process. The Salt Lake City refinery's retrofitted ISOALKY unit is scheduled for startup sometime in 2020.

South of the US border, Pemex Transformacion Industrial (PTI), the processing arm of Mexico's state-owned Petroleos Mexicanos SA, began the process of selecting undisclosed bidders to supply hydrogen to its 122,000-b/d Hector R. Lara Sosa refining complex in Cadereyta, Nueva Leon, in northeastern Mexico, and the 87,400-b/d Francisco I. Madero refinery in Madero, Tamaulipas (OGJ Online, Sept. 13, 2017). While PTI did not disclose a timeframe for when it will reach a final decision on the partnerships, the company said it expects the pending hydrogen supply contracts will result in direct profits of nearly $134 million for Pemex.

Part of the framework of Pemex's 2017-21 business plan, the proposed alliances for hydrogen supply to its struggling refineries are intended to decrease operating costs as well as ensure reliable supplies of hydrogen required for various processing activities to help reduce the frequency of unscheduled shutdowns. The pending contracts also will enable PTI to strengthen overall performance of the two refineries by helping to increase their production of gasoline and diesel fuels.

These latest proposed partnerships for the Cadereyta and Madero refineries follow Pemex's first joint-venture agreement for auxiliary services to its national refining system made with Air Liquide México SA de RL de CV for hydrogen supply to the Miguel Hidalgo refinery in Tula de Allende, Hidalgo, in central Mexico. Under the long-term agreement, Air Liquide will invest €50 million to acquire, upgrade, and operate Pemex's existing hydrogen production unit—a steam methane reformer (SMR)—to supply 90,000 normal cu m/hr of hydrogen to the Tula refinery for 20 years beginning in first-quarter 2018.

The Tula refinery will use hydrogen from the upgraded SMR to help produce cleaner fuels as part a series of initiatives under PTI's broader Fuel Quality Project (formerly Clean Fuels Project) at its six Mexican refineries, which includes similar ultralow-sulfur fuel projects at the Cadereyta and Madero manufacturing sites (OGJ Online, Mar. 21, 2016).

Meridian Energy Group Inc., Belfield, ND, expanded the scope of engineering services to be delivered by Vepica USA Inc., Houston, a subsidiary of Caracas-based Vepica CA, under a previously awarded contract for works on Meridian's two-phased grassroots 55,000-b/sd high-conversion Davis refinery to be built in Billings County, ND, in the heart of southwestern North Dakota's Bakken shale region (OGJ Online, May 10, 2017).

Alongside continuing work as principal engineering firm for design initiation on the refinery's first 27,500-b/sd phase, or Davis Light, Vepica also will provide continued engineering support to the project's permitting effort as well as procurement and fabrication packages for long-lead equipment items, including the atmospheric crude tower.

A key partner in layout and planning works to enable site preparations for the refinery's construction to proceed while the North Dakota Department of Health (NDDH) continues processing the project's air-quality permit, Vepica most recently helped Meridian prepare and file an amendment to its permit-to-construct (PTC) application for the refinery's Davis Light phase. Filed with NDDH on Apr. 5, the PTC application amendment included engineering and configuration adjustments to further improve emissions and product output from project's second 27,500-b/sd phase, or Davis Full.

In addition to confirming Meridian's selection of hydrocracking in lieu of fluid catalytic cracking for Davis Full, the PTC amendment explains the operator's decision to add vacuum distillation and hydrocracking units during the second phase will equip the refinery with greater product flexibility, including an ability to adjust the production ratio of ultralow-sulfur diesel to naphtha in order to meet changing market demands, ensure product quality, and further reduce emission levels from the site.

On Nov. 9, Meridian said it expected NDDH to publish a draft PTC for public review of the project soon. Pending permit approvals, Meridian anticipates Davis Light to be commercially operating in early 2018, with refinery's Davis Full second-phase development to expand processing capacity to 55,000-b/sd sometime in 2019 (OGJ Online, Feb. 21,2017).

In other new refining news, MMEX Resources Corp.—a development-stage company focusing on acquisition, development, and financing of oil, gas, refining, and infrastructure projects in Texas and South America—held a groundbreaking ceremony on Nov. 17 for the first 10,000-b/d phase of its proposed Pecos County, Tex., refinery near the Sulfur Junction spur of the Texas Pacifico railroad, about 20 miles northeast of Fort Stockton. The groundbreaking followed the Texas Commission on Environmental Quality's late-August approval of MMEX's project, which will take about 12-15 months to build, the operator said in a series of releases.

As proposed, the refinery—for which KP Engineering LP will provide engineering, design, and construction services—also will include a $450-million second phase with a capacity of 50,000 b/d. MMEX said it plans to begin construction on Phase 1 in earnest following additional site preparation.

While definitive timelines for startup have yet to be officially confirmed as financing continues to be solidified, the refinery, once completed, would be strategically situated along the Texas Pacifico-South Orient Railroad—which interconnects to the Dallas-Fort Worth area, the Texas Gulf Coast, and Mexico at Presidio—enabling MMEX to leverage existing rail, roadway, and pipeline infrastructure for both crude supply and sale of refined products internationally.

Otherwise on the continent, refiners progressed with a series of mergers, acquisitions, breakups, and divestments to align with broader corporate long-term strategies.

In July, Delek US Holdings Inc., Brentwood, Tenn., completed its purchase of Alon Israel Oil Co. Ltd.'s US-based refining and marketing subsidiary Alon USA Energy Inc., Dallas, which owned and operated a 74,000-b/sd refinery in Krotz Springs, La.; an idled 70,000-b/sd, three-refinery complex in California; and through its majority interest in Alon USA Partners LP, a 73,000 b/sd refinery at Big Spring, Tex. (OGJ Online, July 3, 2017; Jan. 3, 2017). Intended to form a larger, more diverse company positioned to take advantage of market opportunities and better navigate the cyclical nature of the petroleum business, the merger enables the combined company to unlock logistics value from Alon's assets through future potential drop downs to Delek Logistics Partners LP, as well as create a platform for future logistics projects to support a larger refining system.

The completed merger follows Delek's buyout offer to Alon USA in late 2016 as part of a plan to support the companies' shared mission to optimize and grow stable cash flows from an integrated portfolio of refining, logistics, and retail assets to become a peer-leading enterprise in the refinery space for the long-term (OGJ Online, Oct. 21, 2016).

In addition to Alon USA's Krotz Springs and Big Spring refineries, Delek US's new refining system includes its previously held 75,000-b/sd refinery in Tyler, Tex., and 80,000-b/sd refinery in El Dorado, Ark., that now have access to about 207,000-b/d of Permian basin crude to satisfy 69% of feedstock requirements for the new system's more than 300,000-b/sd overall crude throughput capacity.

Alongside expanded retail, renewables, asphalt operations, the merger results in expanded access for the combined refining system to enable expanded distribution and marketing of finished products, including 450,000 bbl/month of space on Colonial pipeline.

Now one of the largest buyers of Permian-sourced crude among the independent refiners, the combined company has expanded access to crude oil pipelines, trucking, and gathering operations in the area—including Delek Logistics's RIO joint-venture crude pipeline in west Texas—to further support Delek Logistics's ability to expand its current operations in the Permian basin.

In November, Husky Energy Inc., Calgary, completed its acquisition of Calumet Specialty Products Partners LP subsidiary Calumet Superior LLC's 47,500-b/cd refinery in Superior, Wis., and other regional downstream assets (OGJ Online, Nov. 9, 2017; Aug. 14, 2017). Alongside the refinery—which processes a mix of light and heavy crudes delivered to the plant via the Enbridge pipeline system from North Dakota's Bakken shale formation and western Canada, which in 2016, included the following grades: North Dakota Sweet (e.g., Bakken), Superior Canadian Heavy, Canadian Synthetic, and Mixed Sweet Blend—Husky acquired:

• A combined 3.6 million bbl of crude-product storage.

• The proprietary pipeline connecting the refinery to the Magellan pipeline system.

• The on-site Superior product terminal and truck-rail racks.

• The off-site Duluth product terminal and truck rack in Proctor, Minn.

• The off-site Crookston and Rhinelander, Wis., asphalt terminals and truck racks.

• The leased Duluth marine terminal.

• Certain crude-gathering assets and line space in North Dakota, including lease-automatic custody transfer stations at Stanley, Beaver Lodge Station and Alexander.

• Certain rail logistics assets.

• A wholesale fuels business that fuels to Calumet-branded gas stations throughout Minnesota, Wisconsin, and Michigan.

Husky, which will retain the refinery's existing workforce, also previously committed to investing in key capital projects to improve operational efficiency of the refinery, including Calumet's earlier planned Superior Flexibility Project (SFP).

Announced in early 2017, the SFP proposes upgrades to increase the plant's ability to process a wider variety of crudes to enable improved product yield, recovery, and overall operational performance as well as capture higher margins following the refinery's scheduled 2018 turnaround.

With its acquisition of the Superior refinery now completed, Husky's total downstream processing capacity increases to 375,250 b/cd.

PJSC Gazprom Neft is investing more than 5.2 billion rubles on a project to upgrade and modernize the existing 767,000-tonne/year delayed coking unit at its 21.4 million-tpy Omsk refinery in Western Siberia as part of its ongoing modernization program to reduce environmental impacts and improve processing capacities, conversion rates, energy efficiency, and production qualities at the site. Photo from Gazprom Neft.

Early in this year's third quarter, Calgary-based Parkland Fuel Corp.—Canada's largest independent marketer of fuel and petroleum products—announced it completed the purchase of Chevron Canada Ltd.'s (CCL) Canadian refining, retail, commercial, and wholesale fuel businesses (OGJ Online, Apr. 20, 2017).

As part of the acquisition, which closed on Oct. 1, Parkland took 100% ownership interest of Chevron Canada R&M ULC, which operated the entirety of Chevron's integrated major Canadian downstream assets, including:

• The 55,000-b/d refinery in Burnaby, BC.

• Three fuel terminals located in Burnaby, Hatch Point, and Port Hardy, BC.

• An aviation business serving Vancouver International Airport.

• 129 Chevron-branded retail service stations mainly located in Vancouver.

• Three marine fuel service stations in Vancouver.

Parkland said the proposed Chevron acquisition aligns with a broader strategy to strengthen its existing supply-focused business model as well as complements its purchase of majority ownership in Alimentation Couche-Tard Inc. subsidiary CST Brands Inc.'s Canadian fuel business.

Parkland, which retained the Burnaby refinery's existing key management personnel, said it will move forward with a major turnaround of the plant scheduled for first-quarter 2018. At a projected cost of $100 million (Can.), the 8-week turnaround will include routine scheduled maintenance as well as upgrades to unidentified operating units.

In May, Saudi Aramco and Royal Dutch Shell PLC completed their previously announced transaction to divide up assets, liabilities, and businesses of their US-based refining and marketing joint venture Motiva Enterprises LLC (OGJ Online, May 15, 2017; Mar. 7, 2017). Finalized on May 1, the transaction follows Aramco subsidiary Saudi Refining Inc. (SRI) and Shell US downstream affiliate SOPC Holdings East LLC's Mar. 6 signing of binding definitive agreements to end the partnership.

Shell now holds sole ownership of the 235,000-b/d Norco refinery—where subsidiary Shell Chemical LP already operates a petrochemical plant—and the 242,250-b/d Convent refinery, which Motiva previously announced will be integrated to create the Louisiana Refining System (OGJ Online, Aug. 12, 2016). Additionally, Shell remains owner of 11 distribution terminals as well as Shell-branded markets in Alabama, Mississippi, Tennessee, Louisiana, a portion of the Florida Panhandle, and the US Northeast, all of which are now fully integrated with Shell's North American downstream business, the company said.

Alongside retaining 24 distribution terminals and the Motiva name, SRI has taken 100% ownership of the 600,000-b/d Port Arthur, Tex., refinery and maintains an exclusive, long-term license to use the Shell brand for gasoline and diesel sales in Georgia, North Carolina, South Carolina, Virginia, Maryland, Washington, DC, the eastern half of Texas, and most of Florida.

In May, Petroleo Brasileiro SA (Petrobras) added the proposed sale of subsidiary Pasadena Refining Systems Inc.'s (PRSI) 100,000-b/d refinery in Pasadena, Tex., to a revised divestments portfolio approved by the company's executive board following a mid-March decision on the divestment plan from Brazil's Federal Court of Accounts, or Tribunal de Contas da Uniao (TCU).

In order to comply with procedures as set forth by Petrobras's 2017-21 strategic plan as well as TCU's Mar. 15 ruling on the company's revised divestment methodology, any potential opportunities to sell the refinery will individually be submitted to the company's executive board, and if approved, will be disclosed to the market in a timely manner, according to separate releases from Petrobras and Brazilian government. Any preliminary information made publicly available on potential transactions for the refinery's sale, however, remains subject to change depending on current market conditions at the time of deal, ongoing portfolio analysis, development of negotiations, and requisite approvals during the transaction process.

Without disclosing further details regarding the decision to add the Pasadena refinery to its list of disposable assets, Petrobras did confirm the sale aligns with its 2017-21 strategic plan, which aims to reduce the company's operational risk and improve its overall financial performance via an expansion of partnership and divestment opportunities.

The newly approved partnership and divestment portfolio now seeks to raise $21 billion in 2017-18, up from the previously estimated target of $19.5 billion under the company's original 2017-21 strategic plan issued in September 2016.

South America, Caribbean

In early January, state-owned Empresa Nacional del Petroleo (Enap), let a contract to Fluor Corp. to provide EPC on a project aimed at improving environmental performance of subsidiary Enap Refinerias SA's 116,000-b/d Bio Bio refinery at Hualpen, in Chile's Bio Bio region (OGJ Online, Jan. 4, 2017). Fluor will deliver EPC services for a series of installations designed to treat residual gas generated in the refinery's fluid catalytic cracking unit to help reduce emissions at the site, including a flue gas steam generator, wet gas scrubber, and purge treatment unit. Work was scheduled to be completed by yearend.

This latest project at Bio Bio comes as part of Enap's program to fulfill several short and long-term commitments to Chilean legal and regulatory authorities under which Enap pledges to invest in projects and initiatives intended to reduce impacts of the refinery's operations on the surrounding environment. Part of an action plan for improving Bio Bio's current atmospheric-emissions abatement systems that Enap previously submitted to Chile's Superintendency of the Environment, addition of the wet gas scrubber specifically aims to reduce emissions of fine particulate matter resulting from continuous regeneration of catalyst at the refinery's FCC. A separate project at Bio Bio involved construction and installation of a tank to accumulate acid waters, including the acid water tank's integration with the refinery's existing Acid Water Treatment Plants Nos. 2 and 3

Between Jan. 1 and June 30, 2016, Enap had invested $5 million into these environmental projects and initiatives at Bio Bio.

In Argentina, BP PLC and Bridas Corp., Buenos Aires, agreed to merge their interests in oil and gas producer Pan American Energy LLC (PAE) and refiner and marketer Axion Energy Argentina SA in a cash-free deal, forming the privately owned, integrated Pan American Energy Group (PAEG) (OGJ Online, Sept. 11, 2017). PAEG will be owned equally by BP and Bridas, which itself is a 50-50 joint venture of Bridas Energy Holdings of Argentina and CNOOC Ltd. of China. PAE is currently owned 60% by BP and 40% by Bridas, while Axion is wholly owned by Bridas. There will be no payments for the equity exchange. The deal is expected to close in early 2018.

PAEG is expected to benefit from BP's global upstream technical and downstream marketing experience as well as Bridas' operating knowledge. The combination may also offer further integration synergies—Axion's 90,000-b/d Campana refinery is already the primary customer for PAE's Argentine crude oil production.

Axion Energy owns and operates the Campana refinery 75 km north of Buenos Aires, has more than 750 retail sites in Argentina, Uruguay, and Paraguay, and has material lubricant and aviation fuels businesses.

Supported by the combined skills and expertise of BP and Bridas, the companies said they expect the new integrated business will be able to pursue growth and development opportunities in Argentina, Uruguay, Paraguay, and Mexico.

PAE was formed in 1997 by the merger of Bridas and Amoco. CNOOC in 2010 acquired a 50% stake in Bridas, which in 2012 acquired ExxonMobil Corp.'s assets in Argentina, Uruguay, and Paraguay, creating Axion Energy.

In June, operator Refineria Isla Curazao BV (RIC)—a subsidiary of Venezuela's state-owned Petroleo de Venezuela SA (PDVSA)—was continuing to restart processing activities at the Curacaoan state-controlled Refineria Di Korsou NV's (RdK) 320,000-b/d Isla refinery at Emmastad, Curacao, following a late May fire at the plant's crude distillation unit.

As of early June, the refinery's thermal cracking plant 1 (TC-1) was entered into operation as a crude distiller to allow partial processing of light-to-medium crude previously destined for crude distillation unit 3 (CD-3), which was impacted by the May 21 fire, PDVSA said.

Alongside the restart of crude distillation unit 2A (CD-2A), RIC also started up the refinery's crude distillation unit 2B (CD-2B) to process Venezuelan heavy Tía Juana crude.

CD-3, however, was still in the process of restarting as of late September, RIC said in a Sept. 26 release.

The midyear incident at the refinery follows the government of Curacao's September 2016 memorandum of understanding with China's state-owned Guandong Zhenrong Energy Co. Ltd. (GDZR), Guangzhou, under which GDZR has agreed to take over operatorship as well as finance an upgrade of the RdK-owned refinery (OGJ Online, Nov. 14, 2016).

Alongside work to replace the plant's current use of heavy residual fuel oil to generate power with natural gas or LNG to help reduce environmental impacts and emissions at the manufacturing site as a means of extending its viability and competitiveness for another 20-30 years, GDZR will fund and execute a series of other modernization projects at the refinery and associated installations. GDZR also has agreed to take responsibility for arranging and securing in advance delivery of crude supplies necessary to operate the refinery.

The MOU with GDZR follows RdK's decision to select a new operator for the Emmastad refinery beginning on Jan. 1, 2020, at which time its lease agreement with current operator RIC is set to expire (OGJ Online, Mar. 19, 2010).

In late September, Jamaica's Prime Minister Andrew Holness reported that the planned $1-billion expansion and overhaul of the Petrojam Ltd. joint venture's 36,000-b/d hydroskimming refinery in Kingston has been placed on hold because of the continued political unrest in Venezuela (OGJ Online, Sept. 22, 2017).

In an agreement finalized by the governments of Venezuela and Jamaica earlier in the year, the expansion would increase the refinery's processing capacity to 50,000 b/d as well as add new unit capacities for the following:

• Vacuum distillation.

• Distillate hydrotreating.

• Naphtha hydrotreating.

• Continuous catalyst regeneration platforming.

• Delayed coking.

• Sour water stripping.

• Amine absorbing.

• Sulfur recovery.

• Tail gas treating (OGJ Online, Feb. 23, 2017).

Elsewhere in the Caribbean, Citgo Petroleum Corp., an indirect wholly owned subsidiary of PDVSA, said on Nov. 20 that it has nearly completed the first phase of accommodations for 400 workers involved in the planned refurbishment and eventual restart of Valero Energy Corp.'s former 235,000-b/d refinery in San Nicolas, Aruba (OGJ Online, Oct. 11, 2016).

The start of construction on the revamp, which began in October 2016, follows a June 2016 agreement between the parties under which Citgo Aruba committed an investment of $450-650 million to transform the refinery into a plant designed exclusively to upgrade Venezuelan extra-heavy crude oil production (OGJ Online, June 13, 2016).

Following the planned 18-24-month overhaul and revamp of existing processing units at the site, the refinery will have a capacity to upgrade 209,000 b/d of extra-heavy crude from Venezuela's Orinoco heavy oil belt into intermediate crude feedstock that will be shipped to Citgo's US refineries for further processing. Naphtha recovered at the plant, in turn, will be sold to PDVSA for use as diluent. Citgo Aruba will operate the San Nicolas refinery—which is now owned by Aruban government subsidiary Refineria di Aruba NV—under a 15-year lease agreement with a 10-year extension option. The refinery is scheduled for full restart by yearend 2018, according to the parties.


In late 2016, Nigerian National Petroleum Corp. announced it would embark on an aggressive program to modernize and upgrade the country's four state-owned refineries beginning in 2017 as part of a strategy to meet Nigeria's domestic demand for refined products and reduce its reliance on foreign imports (OGJ Online, Feb. 13, 2017; Jan. 24, 2017; Dec. 22, 2016).

The comprehensive $500-million rehabilitation program—which will involve projects aimed at ensuring refineries operated by NNPC subsidiaries Port Harcourt Refining Co Ltd. (PHRC), Warri Refining & Petrochemcial Co. Ltd. (WRPC), and Kaduna Refining & Petrochemical Co. Ltd. (KRPC) achieve optimal capacity utilization—comes as part of the company's determination to move away from its historical approach of quick fixes.

The announcement followed a series of efforts initiated by Nigeria's recently elected President Muhammadu Buhari to transform state-owned petroleum operations to enhance focus, accountability, competitiveness, and transparency, measures which included the early 2016 restructuring and reorganization of NNPC, as well as an invitation to private investors to become financial and technical joint-venture partners in the modernization of the country's four state-run refineries (OGJ Online, Mar. 4, 2016).

While a separate initiative proposing to relocate and colocate foreign brownfield refining installations at NNPC's existing refining site pads to augment each refinery's overall site capacity also remains ongoing, no additional capacity under the program was scheduled to come on stream during 2017. By yearend, NNPC said it plans to boost capacity utilization to 60% at its refineries, with a utilization target of 80% by yearend 2018 (OGJ Online, Jan. 12, 2017).

Separately, the US Trade and Development Agency (USTDA) a awarded a $1-million grant to privately held Eko Petrochem & Refining Co. Ltd. (EPRC) for a feasibility study to recommend technologies and develop an implementation plan for a 20,000-b/sd modular refinery to be built on Tomaro Island in Lagos, while PT Intim Perkasa Nigeria Ltd., a subsidiary of PT Intim Perkasa, Jakarta, also indicated interest in building a 10,000-b/sd refinery in Nigeria's state of Akwa Ibom (OGJ Online, Aug. 21, 2017; June 22, 2017).

Meanwhile, Nigerian conglomerate Dangote Industries Ltd. (DIL) continued to let a slew of contracts for subsidiary Dangote Oil Refining Co.'s (DORC) 650,000-b/d grassroots integrated refining complex now under construction in southwestern Nigeria's Lekki Free Trade Zone (OGJ Online, Nov. 9, 2017; Sept. 8, 2017; June 23, 2017; Apr. 27, 2017; Mar. 13, 2017).

To become the world's largest single-train refinery upon commissioning in 2019, DORC's $12-billion Lekki integrated complex will include a 650,000-b/d crude distillation unit, a 3.6 million-tonne/year polypropylene plant, a 3 million-tpy urea plant, and gas processing installations to accommodate 3 bcfd of natural gas that will be transported through 1,100 km of subsea pipeline to be built by DIL. The complex will be equipped to produce 33 million tpy of petroleum products, including gasoline, diesel, kerosine, aviation fuel, and other petrochemicals.

Elsewhere on the continent, Algeria's state-owned Sonatrach SPA let a contract to China National Petroleum Corp. subsidiary China Petroleum Engineering & Construction Corp. for a cooperative reconstruction and extension project at the 2.7 million-tpy Algiers refinery (OGJ Online, June 5, 2017).

Slated to begin in November 2016, the 21-month contract covers rehabilitation works at the refinery that will allow it to increase processing capacity by 35%. The parties have yet to confirm further details of the revamp plan, including either a definitive timeline for completion or revised estimates of its overall cost.

The contract follows series of contracts Sonatrach previously awarded to Amec Foster Wheeler to provide front-end engineering and design (FEED) for three grassroots refineries that will add a total of 15 million tpy in refining capacity in the country (OGJ Online, Mar. 8, 2016). To be located in Biskra, Tiaret, and Hassi Messaoud, each of the three refineries will have a capacity of 5 million tpy and will be configured to process domestic Algerian crude oil.

Cameroon's Societe Nationale de Raffinage SA (Sonara) let a contract to a consortium of French firms Suez SA, Sogea Satom, and Ingenica to provide technology licensing, engineering, and construction for a project to modernize and expand the effluent treatment plant of its 2.1 million-tpy refinery in Limbe (OGJ Online, July 27, 2017).

As part of its scope of work under the contract, Suez will equip the plant with its proprietary Poseidon technology for pretreating refinery effluent, the service provider said. The joint consortium also will build a 18,500-cu m storm basin designed to collect polluted rainwater before treatment to prevent runoff of surface water containing high levels of hydrocarbons.

Scheduled to be completed in September 2018, the modernized effluent plant will be able to treat 9,600 cu m/day of industrial water and rainwater at the site.

As part of its program to improve fuel production and maximize processing of crude produced in Cameroon, Sonara also is executing an ongoing project to expand capacity of the refinery to 3.5 million tpy.

Alongside addition of a new vacuum distillation and hydrocracking units, the expansion will include revamps of existing units. Sonara, however, has yet to release a definitive timeframe for when it will commission the fully expanded refinery.